Jamaica Wants Debt For Climate Change Swap; Antigua Joins In

UNITED NATIONS, New York September 26, 2016 (CMC) – Last Friday, Jamaica told the international community that it is pursuing reforms to improve the efficiency of the public sector, improving its customer service delivery, pursuing economies of scale, reducing duplication and aligning the public sector towards enabling and facilitating economic growth and development.

But Prime Minister, Andrew Holness, told the 71st United Nations General Assembly that while his country was pursing these initiatives, it was also pursuing “reforms aimed at boosting fiscal sustainability and growth; we are also looking at innovative ways of matching our financing needs with sustainable development objectives.

“Jamaica will work with development partners to pursue debt for climate change swaps. This holds the potential of providing bilateral and multilateral relief for climate change adaptation and mitigation initiatives.”

Holness said that such a mechanism has the potential to provide fiscal relief while helping to unlock pledged climate financing to fund adaptation and mitigation initiatives.

“As a climate vulnerable country, Jamaica will play its part to close the climate implementation gap, while at the same time, addressing our debt overhang. This has the potential to be a ground-breaking approach,” he added.

The Jamaican leader also used the opportunity to deal with what he termed the “emerging crisis of the withdrawal of correspondent banking services to certain financial institutions in the Caribbean”.

Caribbean countries have complained about the decision of banks in the United States and Europe to stop doing business with regional banks, effectively putting their respective economies at risk and collapse.

Holness said there was need to “effectively address the emerging crisis” adding “de-risking threatens our economies.

“This trend hinders our participation in the global financial system and in international trade. This, in turn, creates serious obstacles in our efforts toward promoting investment. We respect and have been complying with financial regulatory standards and working within a rules-based, multilateral trade and financial system.”

He added that trade represents approximately 70 percent of the Jamaican economy and, as such, de-risking measures “threaten our integration and economic viability.

“Therefore, we encourage our international partners to take the approach of establishing principles that ensure inclusive development strategies, based on a country’s ability to engage in a vibrant, dynamic international trading system.”

In his address the Jamaican leader said that peace and security is a sustainable development goal (SDG) and is often spoken about in the context of peace between states.

But he said “peace within states is just as important.

“Jamaica, like much of the Caribbean and Central America, is challenged by crime, concentrated in certain communities. This has had a destructive impact on families, and has deterred investment and discouraged business development.

“Crime in sections of Jamaica threatens the attainment of sustainable development goals. Tackling crime is a priority of our government.”

Holness said that while the Jamaican government will do its part, the common problem facing the region requires deeper security cooperation.

“The international community must also move with greater alacrity towards eradicating the illicit trade in small arms and light weapons,” he said, adding that Jamaica is acutely aware of the destruction that can be wrought, as a result of easy access to small arms and light weapons, particularly when in the possession of sophisticated networks of organised criminal groups.

“Our strategic location, which is extremely favourable for trade and logistics, provides a potential transit point for illicit activities. It is this reality that has defined and propelled our participation in a range of bilateral, regional and multilateral arrangements, aimed at restricting the source, means and capabilities that have been fuel to these dangerous relationships, made even more destructive through links to the drug trade”

He told the UNGA that Jamaica has been a staunch supporter of the Arms Trade Treaty (ATT) “and we are working towards its full and effective implementation. We call on all arms exporting countries, to abide by their legally binding obligations under the Treaty.”

Holness also called on the United States to end its trade embargo of Cuba.

“In this regard, Jamaica realizes that the continuation of the economic embargo against our sister Caribbean country, Cuba, is out of step with recent actions to re-establish diplomatic relations between Cuba and the United States. We therefore call for its early lifting.”

And Antigua and Barbuda, on Saturday, joined its Caribbean Community (CARICOM) member state, Jamaica, in raising the issue of debt for climate change swap, while also lamenting moves by financial institutions in developed countries to stifle the socio-economic growth of small islands.

Gaston Alphonso Browne, Prime Minister and Minister for Finance and Corporate Governance of Antigua and Barbuda, addresses the general debate of the General Assembly’s seventy-first session.

Addressing the 71st United Nations General Assembly (UNGA), Prime Minister, Gaston Browne, said that at a rise of 1.5 degrees Celsius, many small island developing states, including those in the Caribbean, will be washed away.

“Temperatures continue to rise, as the bell is tolling. The bell may be tolling for small-islands, but in the words of the poet, John Donne, “it also tolls for thee”.

He said the ravages of climate change will not end with the erosion of small island states, nor will its consequences disappear with the last surging tide.

“Its refugees; its displaced people; the misery of its effects, will wash up on the shores of those who dismiss or neglect the issue today. Mr. President, our small countries endure the problem of climate change not because we created it, but because we are the victims of the polluting profligacy of others.

“But, we are not content simply to wring our hands in anguish, or throw-up our arms in despair. We are keen to help provide solutions. That is why my government has repeatedly proposed debt swaps, for climate change adaptation and mitigation.”

Browne said that many of the small-island states are burdened by high debt, because they are denied access to concessional financing and are forced to borrow at high commercial rates to rebuild after disasters, and to mitigate against them.

“High debt is not only a drag on our economic growth; it constrains our ability to achieve the sustainable development goals. We are caught in a very vicious cycle.

“We have proposed that we be provided with soft loans, to stop further high debt accumulation, while we build resilience to global warming and sea-level rise. However, to qualify for soft loans, requires the international financial institutions and donor governments, to stop using per capita income as a criterion. So far, our pleas have fallen on deaf ears,” he noted.

Prime Minister Browne told the international community that beyond the facade of high income per capita is increasing levels of poverty; high levels of household and individual vulnerability; acute issues in health and education; and worrying rates of unemployment especially amongst the young.

He said high income per capita distorts the reality that, because of the openness of small economies and the dependence on foreign investment, a minority of the population earn the largest percentage of income, leaving the majority at subsistence level and below.

“These are facts that are known to international financial institutions and those who govern them, yet, they are ignored. The more appropriate criteria for allowing access to concessionary financing should be, our very well-known vulnerability to shocks that are generated from outside our shores, and over which we have no control,” the Prime Minister continued.

Browne said that the cost to institutions, such as the World Bank, of refining their criteria would not be very expensive, but that would be a significant measure to allow small countries to improve their economic performance.

“Mr. President, I have to admit a deep sense of frustration and disappointment that, year after year, other heads of government of small states, and I, have come to this Assembly and explained the challenges that confront us, to no avail.

“We remain trapped in the reality of a narrow tax base, high debt, large trade deficits, small underdeveloped domestic financial markets, small private sectors and fragile banking systems.

“I remind this Assembly of the observation of Albert Einstein that: “In matters of truth and justice, there is no difference between large and small problems; for issues concerning the treatment of people are all the same,” he contended.

Prime Minister Browne said that the truth of small states is obvious to all, so too should be the need for justice, as he raised again the need for the United States to settle its World Trade Organization (WTO) dispute with Antigua and Barbuda over internet gaming, as quickly as possible.

But Browne said that the decision by banks in the developed countries to seek to end banking relationships with small islands, including those in the Caribbean, constitutes “an urgent and existential threat of considerable relevance to our survival.

“The latest challenge our countries face is the withdrawal by global banks of correspondent banking relations to our financial institutions. In the international campaign against money-laundering and terrorist-financing, very strict penalties have been imposed on banks by regulatory bodies in North America and Europe, for any infringement of stringent regulations.

“In this environment, where even the slightest infraction could expose a bank to a fee of hundreds of millions of dollars, many banks have chosen to withdraw essential correspondent banking relations from financial institutions in the Caribbean, Central America and Africa,” Browne said.

The Antigua and Barbuda Prime Minister said that they refer to that process as ‘de-risking’.

“I call it economic destruction. It is now prevalent in the Caribbean, but it also exists in parts of Africa and Central America. It will spread with global consequences unless, it is checked by collective action. All these countries, including mine, are now at the point of losing vital correspondent banking relationships. The consequences would be calamitous.

“We would be severed from the world’s trading system, unable to pay for basic goods and services we purchase, or to receive payments for goods and services we sell to other countries. Remittances from our Diaspora would be cut off, causing more of the population to depend on social welfare, at a time, when our economies are already under great stress.

“In other words, it is a growing cancer that is eating away at development; threatening the stability of our region; and denying us the right to participate in the international economy.

“But that is not all. Since the consequence of being cut off from the world trading system, would be economic collapse, not only would poverty and crime dramatically increase, so too would the very global scourges that every nation fears – increase in refugees and human trafficking,” he argued.

He said the consequences would not be limited to just Caribbean countries, adding worse yet, financial transactions that are now regulated and monitored by law enforcement agencies, would be forced underground, creating huge opportunities for money laundering and terrorism financing.

“This would undermine the very global, multi-lateral cooperation that is required to fight these scourges. And, it is important to know that, in all the money laundering and financing of terrorism cases that have been prosecuted in the world, not one of them involved a Caribbean financial institution.

“This matter of ‘de-risking’ is a substantial matter; its consequences are far reaching. The threat we face in the Caribbean is real; the danger is imminent. But, make no mistake, no country will be immune from its consequences, if it is left unchecked.”

He said that CARICOM leaders had mandated him to convene a high-level conference on the matter and that invitations have already been sent to key global-stakeholders to attend the conference that will be held in Antigua, October 27-28.

“Our objective at this conference will be to work collectively to end this huge threat, to the immediate well-being of our region. We are acting responsibly. And, I call on this General Assembly of nations to recognize the substantial and dangerous nature of this issue, and to join us in addressing it constructively,” Browne said.

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